Major publishers invest in Canada’s oldest news agency

The owners of The Toronto Star, the Globe and Mail and La Presse have invested in The Canadian Press.

Pedestrians walk past The Canadian Press head office entrance in Toronto on Friday Nov. 26, 2010.

By:Dana FlavelleBusiness Reporter, Published on Fri Nov 26 2010

After 93 years of service, Canada’s oldest news agency is being transformed into a modern for-profit business under new owners.

Torstar Corp., The Globe and Mail and Square Victoria Communications Group announced Friday they have invested in a new for-profit entity, Canadian Press Enterprises Inc., to take over the operations of the Canadian Press.

Torstar publishes the Toronto Star. Square Victoria is the parent company of Gesca Ltée, which owns La Presse of Montreal.

Terms of the deal were not disclosed.

Each of the owners will be equal partners in the venture and has invested new working capital in the company.

The change in the ownership structure from a non-profit co-operative to a for-private business will allow the company to cover its pension needs and take advantage of future business opportunities, Phillip Crawley, publisher of The Globe and Mail, said in a interview.

“My colleagues and I in the investment group are proud to be assuming ownership of this vital Canadian institution,” Crawley said in a statement. “We will be upholding a very fine tradition and will take the organization into a bright future with excellent business prospects.”

David Holland, president and chief executive officer of Torstar Corp., added: “As one of the founding members of The Canadian Press, Torstar is delighted to join with Square Victoria and The Globe in charting a new future for CP. A viable national news agency is vital for Canadian journalism and we look forward to working with CP management to ensure its success.”

Canadian Press has a serious pension shortfall, which was last valued at $34.4 million.

As part of the restructuring, CP will be given an additional 11 years to cover the shortfall under an agreement with the federal Office of the Superintendent of Financial Institutions, Crawley said. It had already received a two-year extension from the federal government.

The working capital is not to cover the pension, but “to enable us to operate a business that is able to identify growth opportunities and invest in them,” Crawley said.

The new board will meet for the first time Monday to review the company’s operations, Crawley said. Canadian Press employs 300 people.

Crawley acknowledged that the new entity will have competitors. Both Sun Media and Postmedia Network Inc., former CP members, left the co-operative in the past two years and run their own news services.

However, Crawley said CP has a strong brand and the added advantage of an exclusive arrangement to distribute Associated Press news in Canada.

Founded in 1917 as a newspaper co-operative to facilitate the exchange of information across Canada, CP has transformed itself over the past decade into a multi-media organization serving news outlets, government and corporations.

“The attraction for the investors is the fact that we own a high quality content business. Over the last couple of years a number of media companies have cut back on the size of newsrooms and have reduced their ability to generate content. This business was built on a supply of very good content that, as it happens, delivers breaking news. That’s something that’s very hard to match,” Crawley said.

Under the new structure, CP will maintain and enhance its mission of providing trusted, round the clock, real-time news and information in English and French for all media platforms, the new owners said.

CP will also maintain its editorial independence, the new owners said. Decisions about what news and information it distributes will continue to be guided by the bedrock principles of newsworthiness, reliability, accuracy and objectivity.

Members of the co-operative that did not take an ownership stake in the new entity will move to commercial relationships, and services to existing commercial clients will remain intact.

Existing members will not face fee increases for CP’s services at this time, Crawley said.

CP’s membership, consisting of daily newspapers across the country, and the CP board of directors approved the proposed transaction earlier this year, after an independent review concluded that it was fair from a financial standpoint.

CP announced a year ago that it was looking to reinvent itself as a for-profit corporation. The move was taken as part of an agreement with the federal government to delay making payments into CP’s pension plans.

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